Mises and the Emergence of Etatism in Germany (1944)

Writing in the last stages of the Second World War, the Austrian economist Ludwig von Mises (1881-1973), now resident in the United States, reflected on how the total state in Germany came into being. He traced its origins to the 1840s when statist and interventionist ideas emerged in Britain, France, and the U.S. and were eagerly taken up by intellectuals in the German states:

The most important event in the history of the last hundred years is the displacement of liberalism by etatism. Etatism appears in two forms: socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion…

Etatism assigns to the state the task of guiding the citizens and of holding them in tutelage. It aims at restricting the individual’s freedom to act. It seeks to mold his destiny and to vest all initiative in the government alone. It came into Germany from the West. Saint Simon, Owen, Fourier, Pecqueur, Sismondi, Auguste Comte laid its foundations. Lorenz von Stein was the first author to bring the Germans comprehensive information concerning these new doctrines. The appearance in 1842 of the first edition of his book, Socialism and Communism in Present-Day France, was the most important event in pre-Marxian German socialism. The elements of government interference with business, labor legislation, and trade-unionism also reached Germany from the West. In America Frederick List became familiar with the protectionist theories of Alexander Hamilton.

The New Mentality.

The most important event in the history of the last hundred years is the displacement of liberalism by etatism. Etatism appears in two forms: socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.

Etatism too, like liberalism in earlier days, originated in Western Europe and only later came into Germany. …

Etatism assigns to the state the task of guiding the citizens and of holding them in tutelage. It aims at restricting the individual’s freedom to act. It seeks to mold his destiny and to vest all initiative in the government alone. It came into Germany from the West. Saint Simon, Owen, Fourier, Pecqueur, Sismondi, Auguste Comte laid its foundations. Lorenz von Stein was the first author to bring the Germans comprehensive information concerning these new doctrines. The appearance in 1842 of the first edition of his book, Socialism and Communism in Present-Day France, was the most important event in pre-Marxian German socialism. The elements of government interference with business, labor legislation, and trade-unionism also reached Germany from the West. In America Frederick List became familiar with the protectionist theories of Alexander Hamilton.

Liberalism had taught the German intellectuals to absorb Western political ideas with reverential awe. Now, they thought, liberalism was already outstripped; government interference with business had replaced old-fashioned liberal orthodoxy and would inexorably result in socialism. He who did not want to appear backward had to become “social,” i.e., either interventionist or socialist. New ideas succeed only after some lapse of time; years have to pass before they reach the broader strata of intellectuals. List’s National System of Political Economy was published in 1841, a few months before Stein’s book. In 1848 Marx and Engels produced the Communist Manifesto. In the middle ’sixties the prestige of liberalism began to melt away….

About this Quotation:

As a refugee from Nazi occupied Europe the Austrian economist Ludwig von Mises had many important insights to offer the world on the origins of the total state - especially its Nazi version. Interestingly, instead of focusing on the immediate aftermath of the First World War and the injustices of the Versailles Treaty, as many observers did, Mises looks for the deeper roots of government interventionism and militarism in the mid-19th century. In his view German intellectuals and politicians absorbed socialist and interventionist ideas from Britain, France, and the United States from the 1840s onwards which were melded with ideas of Prussian militarism and German nationalism. When a unified German state was finally created during the 1860s classical liberalism was weak and these other ideologies came to predominate in the new German Reich. This was the seedbed which made it possible for the rise of Nazism during the economic and political crises of the 1920s and 1930s.